Memo to EPA: Courts Really Don't Like It When You Appear High-Handed

The decision last week by Judge Amy Berman Jackson – an Obama appointee – to reject EPA’s authority to withdraw its “specification” which authorized the Army Corps of Engineers to issue a § 404 permit to the Mingo Logan Spruce No. 1 mine would be important in its own right. In combination with the recent Supreme Court decision in Sackett, and given the language used in both cases, the combination rebuke to EPA is worth attention.

The permitting history of the Spruce No. 1 mine was lengthy and complicated, but the facts relevant here are not. After a multi-year process, the Corps issued a § 404 permit to Mingo Logan in January 2007. This happened after EPA emailed the Corps, stating that “we have no intention of taking our Spruce Mine concerns any further from a Section 404 standpoint.”

Well, that held true for all of two years. In September 2009, EPA requested that the Corps suspend, revoke, or modify the permit. The Corps rejected EPA’s request and EPA then formally withdrew its specification of the disposal sites identified in the permit.

EPA’s position is that section 404(c) grants it plenary authority to unilaterally modify or revoke a permit that has been duly issued by the Corps – the only permitting agency identified in the statute – and to do so at any time. This is a stunning power for an agency to arrogate to itself when there is absolutely no mention of it in the statute. It is not conferred by section 404(c), and it [sic] contrary to the language, structure, and legislative history of section 404 as a whole.

Note to agency lawyers – when courts use the word “arrogate” to describe your behavior, you are in big trouble.

Review of the court’s complete analysis is beyond the scope of this blog, but it is worth noting that, like Justice Alito in Sackett, Judge Berman too managed to heap scorn on Congress as well as EPA. Trying to parse section 404(c), Judge Berman described it as “poorly written”, “clumsy”, and something that “does not make a great deal of sense.”

The bottom line for Judge Berman was pretty simple. The statute does not grant EPA explicit post-permit withdrawal authority. The Corps is the agency that issues the permits and it does have authority to suspend, revoke or modify. The structure of the statute indicates that one may not discharge without a permit, but that one may do so with a permit. EPA was not able even to explain to the court whether its action actually constituted a withdrawal of the permit. As the Court noted:

First and foremost, EPA’s interpretation fails because it is illogical and impractical. EPA claims that it is not revoking a permit – something it does not have the authority to do – because it is only withdrawing a specification. Yet EPA simultaneously insists that its withdrawal of the specification effectively nullifies the permit. To explain how this would be accomplished in the absence of any statutory provision or even any regulation that details the effect that EPA’s belated action would have on an existing permit, EPA resorts to magical thinking. It posits a scenario involving the automatic self-destruction of a written permit issued by an entirely separate federal agency after years of study and consideration. Poof!

And “poof” went EPA’s authority.

It is important to remember that this decision was not on the merits and does not limit EPA’s authority to prohibit the specifications required for the Corps to issue § 404 permits. I still think that EPA’s science is sufficiently strong that it would survive arbitrary and capricious review – if made before a permit is issued. The decision also does not limit the Corps’ authority to withdraw a permit; the Corps simply refused to do so here. Thus, this decision does not allow mining companies to run roughshod. All it does is provide those companies with the degree of finality that permits are supposed to provide.

To paraphrase Justice Scalia in Sackett, regulatory necessity does not conquer all.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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